IMF and Federal Reserve disagree on timing of rate increase and economic outlook
What's going on?
The Federal Reserve disagrees with the IMF’s warnings about the disparity between traders’ rates and the outlook by central bank officials. The Fed continues to say that the economic slowdown is ending while the IMF remains concerned. The IMF is particularly concerned with the looming Federal Reserve interest rate increase likely to come later this year, as the two argue on the potential negative outcomes and the timing of that decision.
What does this mean?
Dennis Lockhart, President of the Atlanta Federal Reserve, believes that the IMF is mistaken in its stance that stronger economic data is needed to prove the economy is back on track and strengthening. The central banker believes that September may be when we see the first rate increase. He also believes that the first few months of 2015 producing weaker economic data may be an anomaly. The IMF is concerned about traders realizing that the rate increase will negatively affect the stock market. If the Fed were to raise interest rates this would be the first increase since 2006. March produced weaker hiring data and lower oil prices, which further worried officials and investors.
Why should I care?
Disparity amongst the economic outlook and timing of interest rate increase between the Fed and IMF is slightly concerning. For those residing in the U.S., an interest rate increase would potentially make the stock market fall. Before the increase occurs there will be a selling opportunity in the market. Low oil prices are good news for residents, but weaker jobs data and stagnant unemployment continue to plague the U.S. economy.
Originally posted as part of the Finimize daily email.
The top 2 financials stories in 3 minutes. Join over 400,000 Finimizers